ATCL`s newly leased Boeing at crossroads

As Tanzanians celebrate the rebound of the cash-strapped Air Tanzania Company Ltd (ATCL), a senior government official at the Ministry of Transport has blocked signing of the contract to lease the newly acquired Boeing 737-500, putting the national airline’s efforts to jeopardy.

The Guardian on Sunday has reliably established that the top official went as far as threatening to have ATCL’s chief executive officer arrested if the plane started flying on Friday as scheduled.

The man at the loggerheads with the ATCL management is none other than Transport Permanent Secretary Omar Chambo.

The Guardian on Sunday contacted Chambo for the past two days, including texting him about the brewing conflict, but he didn’t respond to any of our queries.

Air Tanzania resumed domestic operations on Friday, flying from Dar es Salaam to Mwanza via Kilimanjaro International Airport (KIA), but the inaugural flight is said to have been made possible only after the personal intervention of Prime Minister Mizengo Pinda.

A top ATCL official told this paper on condition of anonymity that the PS has flatly refused to give a nod to the signing of the lease contract, meaning that the plane now operates without any official contract between the two parties.

“ATCL could not have resumed its operations on Friday as it scheduled because PS Chambo made all attempts to block it. Flight confirmation was made just a few hours before the plane was to take off,” noted the source.

The source added that the permanent secretary threatened ATCL acting Managing Director Paul Chizi with arrest if he dared to operate the leased 108-seater Boeing 737-500 plane without his approval.

“All necessary preparations were in place, ticket bookings and related payments had been made in advance in Dar es Salaam, Kilimanjaro and Mwanza. Therefore, ATCL viewed the situation as a looming disaster if the planned flight was to be cancelled at the last minute. It would have caused major distrust from the customers,” added the source.

This paper was told that Prime Minister Pinda concurred with the ATCL position and plans but ordered the airline’s management to also keenly look into the areas which the PS found contentious.

ATCL has not been with a single operational plane since early last month when their single 50-passenger aircraft – a Bombardier Dash 8 - was involved in an accident when taking off at Kigoma Airport. The airline is reportedly expecting to cover the loss through insurance.

The second Dash 8 aircraft which was bought at the same time with the one which crashed at Kigoma is still undergoing technical maintenance in Dar es Salaam and expected to be operational in the next five to six weeks.

Permanent Secretary Chambo is said to have raised concern over the aircraft’s leasing agreement between ATCL and Aero Vista of Dubai.

The Guardian on Sunday reached PS Chambo over the phone on Friday, but excused himself saying he was attending a meeting, and subsequent attempts to contact him yesterday proved futile as his mobile phone went unanswered.

This writer sent him a text message on his cellphone requesting clarification on the sections of the lease agreement which he was not happy with, but he did not respond at all. However, this paper has reliably learnt that the agreement was presented to newly appointed Minister for Transport Dr. Harrison Mwakyembe, who is himself an accomplished lawyer, who reportedly said that he had no problem with the agreement since there was no government commitment and it would be financially fulfilled through funds generated from the day-to-day operations of the aircraft.

Dr. Mwakyembe could not be reached for comment yesterday as his mobile phone was unreachable while Deputy Minister Dr. Charles Tizeba said over the phone that he was not aware of the matter because he had not been in the city for some days and had just arrived form Mtwara.

This paper could not establish exactly how much money Aero Vista will be paid every two weeks, but this paper has been told by an airline expert that the market value of leasing a Boeing 737-500 is a minimum of $2200 per block hour.

A block hour, according to the expert, is calculated from the moment of removing and placing tyre stabilizers, called chocks in the airline industry.

ATCL has managed to strike a deal that is said to be cheaper than the market leasing value, at around $1700 per block hour, and the cost could still go further down when ATCL’s crew takes over after training and after the deduction of the maintenance cost to be paid by the aircraft’s owner.

It has been established that the agreement, entered into last month, warrants the aircraft’s owners (Aero Vista) to provide crew temporarily, with a provision that ATCL’s crew will take over after undergoing training, scheduled to take about three weeks.

‘ATCL crew is undertaking training in South Africa and they will be in the country after two weeks since the training began early this week,” affirmed the source.

There are two types of aircraft leases: wet lease and dry lease. The former involves leasing of the aircraft and crew from the plane’s owner whereas under the latter only the plane is leased.

The ATCL management is said to have been convinced to ink the agreement as it did not require any deposit of money, as opposed to other leasing agreements entered into in the past.

Under the current agreement all regular technical maintenance will be carried out in Dar es Salaam whereas major ones will be done in Cairo, Egypt.

Aero Vista is also expected to make another plane available for lease within a month from now so as to enable ATCL operate more smoothly.

For some years ATCL has been facing acute administrative, technical and financial difficulties since a joint venture with South Africa Airways ended unceremoniously in 2006 following contractual misunderstandings.

The following year (2007) there was a proposed joint venture with a Chinese firm, Sonangol Holdings Limited, but it was never carried through, resulting only in the purchase of the two Dash 8 aircraft.

The firm also played a big role in a plan that led to the controversial and costly Airbus 320 lease. The leasing agreement was signed prior to the approval of a government guarantee, contrary to the Government Guarantee and Loan Act of 1974, as amended in 2003, raising serious concern from the Controller and Audit General, who subsequently recommending for the disciplining of all the executives involved in the scam.

According to CAG, the leasing bill shot up to a staggering Sh320 billion.